The Public Sector In Financial Flow Statements: Japan'S Case

One of the most characteristic features of Japan's public sector is the predominant role of the Treasury system, which operates not only budgetary funds of the central government but also various other funds such as Postal Savings Funds and surplus funds of public corporations. Among the general account and 45 special accounts of the Treasury system, the Foodstuff Control, the Foreign Exchange Fund and the Trust Fund play important roles, both through their intra‐governmental transactions and through their transactions with private sectors. Particularly noticeable is the role played by the Trust Fund Bureau, which serves as a financial institution for government agencies. Surplus and accumulated funds in the Postal Savings and other special accounts of the Government are deposited in the Trust Fund Bureau, which employs these funds for intra‐governmental ways and means loans, and for government loans and investment programs. Another feature of Japan's Treasury system is that it deposits all the Treasury funds solely with the Bank of Japan. The activities of local authorities and local public enterprises are also largely financed by Treasury funds, and are intertwined with the Treasury system. The statistical systems for monetary and financial flow analysis developed by the Bank of Japan, therefore, place stress on the analysis of flows of Treasury funds, and are based on an institutional sectoring to reflect the flows of funds as they actually take place. One exception is the Monetary Survey compiled in accordance with the IMF formula, which adopts a kind of functional sectoring for international comparison purposes. In the last three years, Japan's public sector, which had long stood rather neutral in the financial patterns of the economy, has begun to show an increasing financial deficit. With the increasing financial deficit of the sector, the financial patterns of the nation as a whole are undergoing remarkable changes.